2024 battery recycling boom: A $USD 95B shift to green energy

The transition to a sustainable energy economy is contingent upon the availability of critical minerals such as lithium, nickel and cobalt, which are essential for battery production. As we aim to reduce our carbon footprint, the role of battery recycling becomes increasingly significant. Experts suggest that effective battery recycling could contribute the equivalent of 30 new lithium mines to the global supply by 2040, which is essential given that without recycling, an estimated 273 additional mines would be needed to meet projected demand.

Technological advancements shaping the future of recycling

The technological landscape of battery recycling is evolving rapidly, with advancements aimed at improving the efficiency and effectiveness of recycling processes. Currently, two primary methods dominate the industry: hydrometallurgical and pyrometallurgical processes. Each has its advantages and challenges, but the goal remains consistent—to maximise recovery rates while minimising environmental impact. Innovative recycling methods, such as direct recycling and hydro-to-cathode active material processes, are under development, potentially revolutionising the industry by enhancing material recovery rates and reducing overall environmental footprint.

A supportive economic and regulatory backdrop

The battery recycling industry is rapidly evolving, spurred by significant regulatory incentives such as the US Inflation Reduction Act 2022, which provides tax credits for recycled battery materials and the EU’s End-of-Life Vehicles Directive, mandating automotive Original Equipment Manufacturer (OEMs) to reclaim end-of-life batteries.

The EU Battery Regulation, in particular, is set to revolutionise the battery supply chain in Europe. Replacing the older EU Battery Directive, this new regulation introduces stringent requirements for batteries sold within the EU, including mandates on recycled content, carbon footprint disclosure and due diligence for sourcing of raw materials. The regulation is phased, with increasing requirements set to come into force from 2031 onwards, highlighting the EU’s commitment to environmental sustainability and ethical sourcing practices.

This regulatory framework is particularly significant as it sets clear targets for the recycled content of lithium, nickel and cobalt in batteries, thereby directly influencing the demand for recycled materials. The introduction of a digital battery passport, mandatory by February 2027, is another innovative aspect of the regulation, aimed at enhancing transparency and traceability across the battery lifecycle.

These global initiatives reflect a broader global trend towards sustainable battery solutions, underpinned by the increasing value of recovered metals and the shift towards sustainable battery chemistries.

Profitability in sight

Within the global battery recycling sector, encompassing processes from collection through to metal extraction, annual revenues are anticipated to increase to over $95 billion by the year 2040. This growth is mainly attributed to the value of the extracted metals, projected trends in battery cell chemistry and the regional diversification of supply chains. By 2025, the revenue generated per ton of recycled battery material is estimated to nearly reach $600. Looking ahead, the potential for value creation in this industry is expected to align closely with that of the primary metals sector, which currently stands at approximately 30%, contingent on fluctuations in market prices.

Environmental impacts and material recovery

Recycling offers a sustainable alternative to traditional mining, significantly reducing the environmental footprint. Recycled battery materials can slash carbon emissions by approximately four times compared to virgin materials. This shift is crucial as the industry gravitates towards a more sustainable and accountable supply chain model, aligning with global environmental goals and consumer expectations.

The global supply chain and material demand

The global demand for critical minerals is escalating and recycling is poised to play a crucial role in meeting this demand. According to the International Energy Agency (IEA), recycling and reuse efforts could substantially reduce the primary supply requirements for selected minerals in the Sustainable Development Scenario between 2030 and 2040. This not only mitigates the environmental damage caused by mining but also alleviates geopolitical tensions associated with mineral supply chains.

Case studies: Pioneering success in battery recycling

Case studies, such as the recycling programs initiated by Umicore or the American Manganese’s RecycLiCo process, demonstrate the practical and economic feasibility of recycling batteries. These examples showcase successful recovery of high-purity materials, reinforcing the viability and environmental benefits of recycling initiatives.

Conclusion

Battery recycling is an indispensable component of the transition to a sustainable energy economy. With the impending surge in demand for EVs and other battery-powered technologies, the need for lithium, nickel and cobalt will escalate dramatically. The concerted efforts in technological innovation, supported by favourable economic and regulatory landscapes, are setting the stage for a significant expansion of the battery recycling industry. As we edge closer to 2040, the integration of recycling into global supply chains becomes imperative for achieving a sustainable, efficient and resilient battery ecosystem, ensuring a balanced approach between technological advancement and environmental stewardship.